Lawmakers close in on Walker tax cut agreement

Republicans who control the state Legislature are close to a deal that will lead to passage of Gov. Scott Walker's $504 million income and property tax package next month, Senate Majority Leader Scott Fitzgerald said Tuesday.

Lawmakers were committed to the property and income tax reductions in Walker's proposal but were still discussing other changes to reduce a projected budget shortfall, Fitzgerald said.

The Assembly passed the tax cuts last week, but it has been slower going in the Senate, where some moderate conservatives were concerned about how much the plan grew a projected shortfall for the next budget that begins in mid-2015.

Fitzgerald said the Senate is considering a variety of changes to lower that projected shortfall from $807 million to between $657 million and $690 million.

One move floated by Sen. Rob Cowles, R-Allouez, was to cut $35 million that has been collected across state government in fees but not spent, Fitzgerald said. But neither the Assembly nor Walker was on board with that approach, Fitzgerald said.

The Senate is also likely to remove a $7.5 million annual sales tax exemption for construction companies doing work for schools, local governments and some nonprofits, Fitzgerald said. That was added by the Assembly and not a part of Walker's original bill.

"I don't think there's a lot of excitement for it being in there," Fitzgerald said.

The budget-writing Joint Finance Committee planned to vote Wednesday on the bill. Fitzgerald said that vote will determine the final version of the proposal that the Senate will take up on March 4. The Assembly would have to vote again on the Senate version before it goes to Walker for his signature.

"We knew all along we were going to get there," said the committee's co-chair, Rep. John Nygren, R-Marinette. "Sometimes it takes some people a little longer."

Assembly Speaker Robin Vos, a Republican who has openly sparred with Fitzgerald on this issue and others in recent weeks, issued a conciliatory statement.

"I'm pleased to see the legislative process move forward," Vos said. "I know that Sen. Fitzgerald and Senate Republicans want to pass the tax cuts, too. We look forward to working with them to get it done as quickly as possible."

The projected budget shortfall that slowed the plan in the Senate doesn't account for any future revenue growth. Walker has argued that leaving it at $807 million, as his tax cut proposal does, is reasonable because if revenue grows at 10-year averages the state will collect $1.5 billion, more than enough to meet spending commitments.

Walker's spokesman Tom Evenson said the governor continued to work with the Legislature on the tax cut bill.

Walker's proposal would spend $406 million on lowering property taxes, by reducing the amount that technical colleges collect and replacing it with state money. It would save the owner of a median-valued home $131 on the bill that is mailed this December.

Walker also wants to cut income taxes by $98.6 million by reducing the lowest bracket from 4.4 percent to 4 percent. That would save the average worker $46 a year.

Another part of Walker's plan, which his administration enacted and does not need legislative approval, updates income tax withholding brackets. The typical family of four is estimated to see $58 more in their paychecks starting in April, based on estimates by the state Department of Revenue.

Walker's proposal also includes about $32 million in various other adjustments and income tax credits to ensure that high income earners who pay the alternative minimum tax still qualify.

Democrat Mary Burke, who is challenging Walker in the governor's race, has criticized his tax cut proposal saying the state should do more to target tax cuts to the middle class, increase spending on worker training programs, reduce debt and address projected shortfalls in Medicaid and transportation funding.